Posted in Finance, Accounting and Economics Terms, Total Reads: 485
How do we know when our decision is right or wrong? Is there a way to see the consequences even before the decision takes place? Utilitarianism, a concept in normative ethics, word coined by the philosophers Jeremy Bentham and John Stuart Mill, is a theory in which a decision is right if the person who took the decision and people who are affected by it are happy, and wrong if it causes pain and displeasure otherwise. This theory also states that, happiness and pleasure are the only outcomes of a decision that are valued and whereas outcomes like pain and sorrow are devalued. It is determined by its contribution to overall utility by maximum number of individuals.
There were many criticisms to this theory, many stating that emotions like pleasure, happiness cannot be measured or valued literally, among different individuals. They also argued about the duration a decision would yield into an action and consequences to occur. Faced with such criticisms, Utilitarians defended that the best estimates of the consequences or predictions based on the previous past experiences are more than enough to conclude.
There are two types of utilitarianism, Act Utilitarianism and Rule Utilitarianism. Act Utilitarianism is applied to each alternative, given number of choices to choose from in a particular situation. The best and the maximum utility is then defined as the right act. This is suitable only for particular actions. Rule Utilitarianism is applied to rules to check their validity. If people continued to stick to the promise of the rule, abiding by the rule, it is defined as right and if they go against the rule and break promises, it is considered wrong.